Research: The governance of the shale gas revolution in South Africa
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Our Research posts are about the latest academic research being done in the School of Economics. This week the latest research presented at ERSA’s Industrial Organisation workshop:

The governance of the shale gas revolution in South Africa

by Geoffrey Chapman & Requier Wait

Many have labelled the Karoo’s shale gas reserves as a potential “game-changer” for the South African energy sector. The US experience has been labelled a “shale gas revolution”. Many question whether the US experience can be replicated in South Africa. Considering the EIA’s estimate of 390 trillion cubic feet (tcf) in (unproven) technically recoverable shale gas resources, the potential for economic gains does exist. However, shale gas development/production holds both economic advantages and potential environmental costs. For this reason, regulation of fracking activities is a crucial aspect to consider if the Karoo’s shale gas is to be developed. This paper reviews the regulation imposed in other countries as well as the current regulatory framework for South Africa. Regulation is considered in terms of three factors, namely: the content of fracking fluid, seismic activity and the pricing regime. Effective regulation will be a key determinant of the overall positive or negative impact on the South African economy.